Corn, Wheat, Soy Rise, Renewing Food-Inflation Concern

Seed corn is loaded into a tractor trailer from a grain bin in Sheffield, Illinois. Photographer: Daniel Acker/Bloomberg

(Corrects first paragraph to add dropped ‘2010.’)

March 30 (Bloomberg) -- Corn prices surged the most since
June 2010, wheat had its biggest gain in five months, and
soybeans rallied after government forecasts signaled tighter
U.S. crop supplies, renewing concerns that food inflation will
quicken.

Corn inventories on March 1 fell more than analysts
forecast to the lowest for this time of year since 2004, the
U.S. Department of Agriculture said today in a report. Wheat
reserves dropped to a three-year low, and planting intentions
trailed estimates. Farmers will sow 73.902 million acres with
soybeans this year, down 1.4 percent from 2011 and the lowest in
five years, the agency said after surveying farmers.

Global food prices rose to an all-time high last year,
triggering unrest in northern Africa and the Middle East. The
United Nations said this month that grain imports by the world’s
poorest countries will climb to a record in the 12 months ending
June 30. The U.S. was the world’s biggest exporter of corn,
soybeans and wheat last year.

“There is no question we will see higher food prices this
year,” Steve Nicholson, a commodity procurement specialist at
International Food Production Corp. in Fenton, Missouri, said in
a telephone interview. “You have to see prices go up to
stimulate global production and ration declining supplies.”

On the Chicago Board of Trade, corn futures for May
delivery jumped by the exchange limit of 40 cents, or 6.6
percent, to close at $6.44 a bushel at 1:15 p.m. That was the
biggest gain for a most-active contract since June 30, 2010. The
advance pared the decline for the quarter to 0.4 percent.

Stockpiles of corn on March 1 fell 7.9 percent to 6.009
billion bushels from a year earlier, the USDA said. Analysts in
a Bloomberg survey expected 6.16 billion, on average. The
agency’s estimate of consumption in the three months ended Feb.
29 unexpectedly rose 3.1 percent to a record 3.64 billion
bushels. That figure includes use in food, livestock feed and
fuel, along with exports and waste.

Wheat

Wheat inventories as of March 1 fell 16 percent to 1.201
billion bushels from a year earlier. The average estimate by
analysts in the Bloomberg survey was 1.25 billion.

Wheat futures for May delivery rose 7.9 percent to settle
at $6.6075 a bushel in Chicago, the biggest gain since Oct. 11.
Most-active futures rose 1.2 percent during the past three
months.

On the Minneapolis Grain Exchange, spring-wheat futures
jumped the most in 10 months after the USDA said farmers will
cut plantings to seed more corn, soybeans, barley and other
crops.

Spring-wheat planting will fall to 11.976 million acres
from 12.394 million a year earlier, the agency said. Analysts
projected 13.35 million, on average.

“People expected more spring-wheat planting, and farmers
say they want to plant other crops,” Dave Marshall, a farm-marketing adviser at Toay Commodity Futures Group Inc. in
Nashville, Illinois, said in a telephone interview. “That’s a
sign that prices are not high enough to compete.”

The soybean-seeding forecast was about 1.5 million acres
below the average estimate of analysts and almost 1.1 million
less than a year earlier. Farmers told the USDA that they plan
to cut the planted area in seven of the top-eight producing
states.

Weather Risk

“Given the long season ahead and the risk of weather
disruptions along with low inventories, the outlook for soybean
and corn crops remains bullish,” Rabobank International said
today in a report. “The upside risk is considerable, and if
crop potential is threatened by weather, we would expect prices
to visit new highs.”

Soybean futures for May delivery surged 3.5 percent to
close at $14.03 a bushel on the CBOT, the biggest gain since
Oct. 11. Earlier, the price touched $14.16, the highest since
Sept. 12.

The price jumped 16 percent in the first quarter after dry
weather reduced crops in South America. Brazil is forecast by
the USDA to be the largest exporter this year, topping the U.S.
for the first time.